Telefonica, 1&1 end talks on concessions for E-Plus deal?

Negotiations between Spain’s Telefonica, which is seeking European Commission (EC) approval for its EUR8.55 billion (USD11.9 billion) acquisition of German mobile operator E-Plus, and United Internet (1&1) over a potential network access deal have broken down, Bloomberg cites three people familiar with the matter as saying. According to the sources, United Internet was seeking guarantees from Telefonica for access to faster internet that would maintain an existing wholesale agreement with E-Plus for transmission based on LTE technology, but the company was told that concessions to the EC would not include such terms. Telefonica is now relying on a deal to share as much as 7% of its network capacity with each of three other mobile service providers – freenet, Drillisch and Liberty Global’s local calbleco Unitymedia KabelBW – to overcome EC antitrust concerns. Under the concessions, smaller operators would have the option of securing sufficient volumes and pricing from Telefonica for mobile bitstream access, the people said.

Netherlands-based KPN agreed to sell E-Plus to Telefonica in July 2013 and in December the EC opened an in-depth investigation into the transaction, TeleGeography’s GlobalComms Database notes. If approved, the combination of Telefonica and E-Plus would reduce the number of network operators from four to three, with the enlarged Telefonica becoming the market leader ahead of Telekom Deutschland and Vodafone Germany. Late last month the EC extended the deadline for its decision on the deal by a further five working days to 10 July.